Insurance is a unique business. Premiums are priced upfront for risks (claims) that are made (or not) at some stage down the track, for uncertain amounts. There is no business where understanding and managing risk is more critical. If fact, it is the business.
The failure of New Zealand-based insurer CBL Corporation (ASX:CBL), a true riches-to-rags story, illustrates this point.
It all began well. CBL listed in October 2015 with an attractive story. The New Zealand-based and ASX-listed company was achieving strong revenue and earnings growth (largely overseas) in challenging insurance conditions.
Management and the board had industry experience and skin in the game, owning more than 50% of the company. Upon listing at $1.62 a share…
Read the full article at: https://www.intelligentinvestor.com.au/how-cbl-went-bust-in-a-month-1887231
